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Economy of Iran

The economy of Iran is a mixed and transition economy with a large public sector. Some 60% of the economy is centrally planned. It is dominated by oil and gas production, although over 40 industries are directly involved in the Tehran Stock Exchange, one of the best performing exchanges in the world over the past decade. With 10% of the world's proven oil reserves and 15% of its gas reserves, Iran is considered an "energy superpower".

It is the world's eighteenth largest by purchasing power parity (PPP) and twenty-nine by nominal gross domestic product. The country is a member of Next Eleven because of its high development potential. A unique feature of Iran's economy is the presence of large religious foundations called Bonyad, whose combined budgets represent more than 30% ofcentral government spending.

Most of the country's exports are oil and gas, accounting for a majority of government revenue in 2010. Oil export revenues enabled Iran to amass well over $100 billion in foreign exchange reserves as of 2010. Iran ranked first inscientific growth in the world in 2011 and has one of the fastest development in telecommunication globally.

Due to its relative isolation from global financial markets, Iran was initially able to avoid recession in the aftermath of the 2008 global financial crisis. Yet, following increasingly stringent sanctions imposed by the international community as a result of the country's nuclear program, oil exports fell by half, allowing Iraqi oil exports to overtake Iran's for the first time since the 1980s. In September 2012, the Iranian rial fell to a record low of 23,900 to the US dollar.

Sectors

Agriculture and foodstuffs

Agriculture contributes just over 11% to the gross national product and employs a third of the labour force. About 11% of Iran's land is arable, with the main food-producing areas located in the Caspian region and in north western valleys. Some northern and western areas support rain-fed agriculture, while others require irrigation. Agricultural production is increasing as a result of modernization, mechanization, improvements to crops and livestock as well as land redistribution programs.

Wheat, the most important crop, is grown mainly in the west and northwest. Rice is the major crop in the Caspian region. Other crops include barley, corn, cotton, sugar beets, tea, hemp, tobacco, fruits, potatoes, legumes (beans and lentils), vegetables, fodder plants (alfalfa and clover), almonds, walnuts and spices including cumin and sumac. Iran is the world's largest producer of saffron, pistachios, honey, berberis and berries and the second largest date producer. Meat and dairy products include lamb, goat meat, beef, poultry, milk, eggs, butter and cheese.

Manufacturing

Iran's major manufactured products are petrochemicals, steel and copper products. Other important manufactures include automobiles, home and electric appliances, telecommunications equipment, cement and industrial machinery. Iran operates the largest operational population of industrial robots in West Asia. Other products include paper, rubber products, processed foods, leather products and pharmaceuticals.

Handicrafts

Iran has a long tradition of producing artisanal goods including Persian carpets, ceramics, copperware, brassware, glass, leather goods, textiles and wooden artifacts. The country's carpet-weaving tradition dates from pre-Islamic times and remains an important industry contributing substantial amounts to rural incomes. Around 5.2 million people work in some 250 handicraft fields and contribute 3% of GDP.

Automobile manufacturing

As of 2001, 13 public and privately owned automakers within Iran, led by Iran Khodro and Saipa that accounted for 94% of domestic production. Automakers produce a wide range of vehicles including motorbikes, passenger cars such as Saipa's Tiba, vans, mini trucks, medium-sized trucks, heavy trucks, minibuses, large buses and other heavy automobiles used for commercial and private activities in the country. In 2009 Iran ranked fifth in car production growth after China, Taiwan, Romania and India.

Defence industry

In 2007 the International Institute for Strategic Studies estimated Iran's defence budget at $7.31 billion, equivalent to 2.6% of GDP or $102 per capita, ranking it 25th internationally. The country's defence industry manufactures many types of arms and equipment. In 2006 Iran exported weapons to 57 countries, including NATO members, and exports reached $100 million.

Construction and real estate

Annual turnover amounted to $38.4 billion in 2005 and $32.8 billion in 2011.Because of poor construction quality, many buildings need seismic reinforcement or renovation.Iran has a large dam building industry.

Mines and metals

Mineral production contributed 0.6% of the country's GDP in 2011, a figure that increases to 4% when mining-related industries are included. Although the petroleum industry provides the majority of revenue, about 75% of all mining sector employees work in mines producing minerals other than oil and natural gas. These include coal, iron ore, copper, lead, zinc, chromium, barite, salt, gypsum, molybdenum strontium, silica, uranium, and gold, the latter of which is mainly a by-product of the Sar Cheshmeh copper complex operation. Cement production reached 65 million tons in 2009, exporting to 40 countries.

Petrochemicals

Iran manufactures 60-70% of its equipment domestically, including refineries, oil tankers, drilling rigs, offshore platforms and exploration instruments.

Iran's exports in petrochemicals reached $5.5 billion in 2007, $9 billion in 2008 and $7.6 billion during the first ten months of the Iranian calendar year 2010.

Services

Estimates of service sector spending in Iran are regularly more than two-fifths of GDP, much government-related, including military expenditures, government salaries and social security disbursements. Important service industries include public services (including education), commerce, personal services, professional services and tourism.

The total value of transport and communications is expected to rise to $46 billion in nominal terms by 2013, representing 6.8% of Iran's GDP.

Energy, gas and petroleum

Iran possesses 10% of the world's proven oil reserves and 15% of its gas reserves. Domestic oil and gas along with hydroelectric power facilities provide power. Iran recycles 28% of its used oil and gas, whereas some other countries reprocess up to 60%.

By 2004, annual oil production reached 1.4 billion barrels producing a net profit of $50 billion. Iranian Central Bank data show a declining trend in the share of Iranian exports from oil-products (2006/2007: 84.9%, 2007/2008: 86.5%, 2008/2009: 85.5%, 2009/2010: 79.8%, 2010/2011 (first three quarters): 78.9%).Iranian officials estimate that Iran's annual oil and gas revenues could reach $250 billion by 2015 once current projects come on stream.

Retail and distribution

In 2012, Iranians spent $77 billion on food, $22 billion on clothes and $18.5 billion on outward tourism. In 2015, overall consumer expenditures and disposable income are projected at $176.4 billion and $287 billion respectively.

Healthcare and Pharma

The total market value of Iran's health and medical sector was $24 billion in 2002 and was forecast to rise to $50 billion by 2013. In 2006, 55 pharmaceutical companies in Iran produced 96% (quantitatively) of the medicines for a market worth $1.2 billion. This figure is projected to increase to $3.65 billion by 2013.

Tourism and travel

About 1,659,000 foreign tourists visited Iran in 2004 and 2.3 million in 2009 mostly from Asian countries, including the republics of Central Asia, while about 10% came from the European Union and North America. According to UNESCO and the deputy head of research for Iran Travel and Tourism Organization (ITTO), Iran is rated among the "10 most touristic countries in the world". Domestic tourism in Iran is one of the largest in the world.

Banking, finance and insurance

The banking system consists of a central bank, the Bank Markazi, which issues currency and oversees all state and private banks. Several commercial banks have branches throughout the country.

Foreign transactions with Iran amounted to $150 billion of major contracts between 2000 and 2007, including private and government lines of credit.Insurance premiums accounted for just under 1% of GDP in 2008, a figure partly attributable to low average income per head. In 2001/02 third-party liability insurance accounted for 46% of premiums, followed by health insurance (13%), fire insurance (10%) and life insurance (9.9%).

Communications, electronics and IT

Broadcast media, including five national radio stations and five national television networks as well as dozens of local radio and television stations are run by the government.

According to the World Bank, Iran's information and communications technology sector had a 1.4% share of GDP in 2008. Around 150,000 people work in this sector, including 20,000 in the software industry. 1,200 IT companies were registered in 2002, 200 in software development. In 2014 software exports stood at $400 million. By the end of 2009, Iran's telecom market was the fourth-largest in the Middle East at $9.2 billion and was expected to reach $12.9 billion by 2014 at a compound annual growth rate of 6.9%.

Transport

Iran has an extensive paved road system linking most towns and all cities. In 2011 the country had 173,000 kilometres (107,000 mi) of roads, of which 73% were paved. In 2007 there were approximately 100 passenger cars for every 1,000 inhabitants. Trains operated on 11,106 kilometres (6,901 mi) of track.

More than one million people work in the transportation sector, accounting for 9% of 2008 GDP.

This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article "Economy Of Iran"

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